Polish distributor flags second Covid-19 wave risk

Drozapol says the largest risk for business in the remainder of 2020 is the huge uncertainty surrounding the second wave of the Covid-19 pandemic and the resulting restrictions. These should not however be as drastic as the measures seen in March-May.

The Polish distributor’s consolidated revenue fell -2% on-year in the first half of 2020 to PLN 56.79 million ($14.7m). The firm however turned to a PLN 1.19m net profit versus a PLN 2.35m loss a year earlier.

Purchasing rose 26% to PLN 45.29m as the high inventory levels in H1 2019 meant the firm procured less material last year. Domestic suppliers’ share in overall procurement rose to 44% from 31% in H1 2019, while imports’ share dropped 13 percentage points to 56%, Kallanish notes.

The steel market is counting on a further demand rebound, which began in July, but it is too early to talk about a return to normality, Drozapol says. The dynamic going forward will depend on supply levels and the pace at which EU safeguard quotas are exhausted. The latter has greatly disrupted established supply patterns and impacted the timeliness of deliveries.

2020 was supposed to be a challenging year, albeit less so than 2019, and then the pandemic struck unexpectedly, Drozapol observes. Although they held up for the first few weeks of the second quarter, steel demand and prices fell from May onwards, hampering the firm’s earnings.

Drozapol’s consolidated revenue dropped -20% on-year in 2019 to PLN 123.4m and the firm sunk to a PLN 4.4m loss versus a PLN 220,000 profit a year earlier.